France looks to lift ailing economy with business-friendly diplomacy

French agencies promoting trade and tourism are now officially part of the country's diplomatic service. But will this help tackle France’s mounting trade deficit and create jobs back home?

With economic growth concentrated in emerging countries outside the reach of many French companies, the government in Paris is attempting to make France’s extensive diplomatic service more business-friendly by transferring the foreign trade and tourism portfolios to the Ministry of Foreign Affairs.

At a press briefing on Friday, the ministry’s spokesman, Romain Nadal, described the reorganisation as “a new step to reinforce the efficiency” of the administrative services involved in supporting French businesses on international markets.

"[Foreign Minister] Laurent Fabius has made economic diplomacy one of his key priorities and pushed the Ministry of Foreign Affairs and International Development to become ‘the home of business’ by placing the promotion of our economic interests at the heart of his action,” Nadal added.

Following the cabinet reshuffle decided on April 8 by President François Hollande, national media focused on what appeared to be a power struggle between Fabius and the new economy minister, Arnaud Montebourg, for the control of France’s extensive network of foreign trade missions.

The structure has since been clarified: the new junior minister for trade and tourism, Fleur Pellerin, now reports to Fabius, and separate agencies promoting French exports as well as inward foreign investment are to be merged under the Foreign Affairs Ministry.

'The second largest diplomatic network in the world'

This means the French diplomatic service must look beyond its traditional areas of influence in Europe, North America, West and North Africa and the Middle-East.

“Some 60% of the world’s growth comes from the BRICS countries,” Bernard Carayon, a former MP and author of a parliamentary report on business intelligence, told FRANCE 24, referring to Brazil, Russia, India, China and South Africa. “They are the engine of global growth,” said Carayon, who also chairs two think-tanks dedicated to the promotion of international business intelligence in France.

Although he belongs to the opposition right-wing UMP party, Carayon supports the streamlining of business support services to make the best use of “the second-largest diplomatic network in the world”.

The policy of diplomatic support to French businesses is not new, but it used to be plagued by rivalries between offices reporting to various ministries. Carayon says their integration, which he recommended in his parliamentary report, started under former President Nicolas Sarkozy and is backed by politicians on both sides of the political spectrum.

Emerging markets

Recent state visits underscore France’s focus on fostering business ties with emerging countries.

While the brief detention of press freedom activists and extensive road closures sparked outrage in Paris when Chinese President Xi Jinping toured France at the end of March, authorities indicated this was the price to pay for major deals with China.

“His visit was extremely successful and it was broadcast on all Chinese television channels. It will have a colossal effect. There is a lot to do, especially in India, Brazil and other such big countries,” Fabius told a meeting of diplomats and business leaders on April 8.

French firms eye Mexico's thriving aeronautical sector

President Hollande’s visit to Mexico last week, too, had a large trade and investment component – paving the way for French companies interested in the opening up of the Central American country’s oil and gas sector or partnerships with its growing aerospace industry.

And as domestic unemployment continues to hit record highs, French officials insist the economic diplomacy drive is part of the government strategy to restore growth and create jobs at home.
“Our new organization aims to focus resources on the economic recovery of France,” foreign affairs spokesman Nadal said.

Lessons from America

The problem is that the strategy has yet to achieve any tangible results. France’s annual trade deficit has remained above 60 billion euros for the past three years and exports are declining.

“Laurent Fabius is the minister who has done the most to put the diplomatic service at the service of businesses in the past two years, but when asked about results at last week’s trade forum, he simply replied that measuring results was not the purpose of the meeting,” said Ali Laïdi, an associate researcher at the Paris-based Insitute for International Relations and Strategic Studies, who hosts FRANCE 24’s Beyond Business show. “This means things are not moving fast enough,” he added.

Figures released at the forum remained vague, indicating for example that diplomatic missions “contributed significant assistance for the signing of 251 contracts worth more than 10 million euros each”.

This compares poorly with the record of the US government’s Advocacy Center, the international yardstick in terms of business diplomacy. “For each company they support, the Americans publish the value of each deal and the number of jobs created in the US on the Internet,” Laïdi remarked.

While cooperation is well established between the diplomatic service and large French-based companies in industries such as banking or utilities, small and medium-sized companies are finding it harder to get government support on foreign markets.

“Diplomacy has focused on large deals for too long,” international business consultant Alexandre Kateb told FRANCE 24.

“Medium-sized companies looking at international development should now be targeted if we want to replicate Germany’s success,” he added.

In answer to this concern, the Foreign Affairs Ministry now publishes an interactive map of upcoming official visits, offering small and medium-sized businesses an opportunity to contact ministers in advance of their trips and join them on diplomatic and business engagements in prospective countries.

French embassies have also formed economic councils, which bring together diplomats

Putting business first

Kateb welcomes any move to include business in economic diplomacy and argues more efforts should target that area, rather than spending energy on reorganizing administrative structures.

“The current logic remains a top-down one, with the state giving the impulse. Our economic diplomacy is more about diplomacy than the economy,” he said. “The debate about administrative organisation is irrelevant. What is important now is to put the companies at the heart of the system.”

According to Bernard Carayon, the tradition of systematically appointing senior civil servants as ambassadors is another obstacle to efficient economic diplomacy. “American ambassadors in high-potential countries are always business people. French ambassadors never are,” he said.

Diplomatic crises such as the current spat with Russia over the situation in Ukraine, too, pose a threat to a strategy linking diplomats and entrepreneurs more tightly. “Some countries have been opposed to our position on Kosovo, hostile to French intervention in Ivory Coast or to our support for groups opposing Bashar al-Assad in Syria, yet they are the countries where we must go and conquer markets,” Carayon acknowledged.

Conversely, he noted that European countries in general and France in particular had abandoned “legitimate principles on the use of intelligence for economic purposes and privacy protection” by forging ahead with negotiations on the future transatlantic free trade agreement despite the spying scandal unveiled by former NSA contractor Edward Snowden.

Despite those threats, Carayon thinks the overall benefits of a more integrated economic diplomacy tip the balance in its favour.

"We are more exposed to risk when the foreign service gets involved,” he said. "But their knowledge of the local environment means that, on balance, this economic diplomacy is worthwhile."